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Shop price deflation at four-year low

Shop price deflation shows signs of coming to an end after more than four years, the British Retail Consortium (BRC) has found.

Shop prices marginally dipped by 0.1% year on year for the period between 6-10 November for the third consecutive month, according to the BRC-Nielsen Shop Price Index.

The figure signals the shallowest deflation rate seen since 2013.

Non-food price deflation eased to 1.1% in November, compared with 1.5% in October, which was similarly the lowest level for the past four years.

Helen Dickinson, chief executive at the BRC, said the non-food deflation lows occurred as hedging contracts drew to an end, ending several retailers’ ability to “shield their customers from the currency depreciation”.

Dickinson also pointed to lower projections for consumer spending and uplifts in labour costs as the main drivers behind “a perfect storm of economic pressures looming over an industry that’s already fiercely competitive”.

She said that the earlier switch to CPI indexation on business rates will ease pressure on retailers, but “stark” challenges remain in the face of higher import costs and tightening squeeze on discretionary spending power.

Mike Watkins, head of retailer and business insight at Nielsen, said: “Many inflationary increases are still being absorbed by retailers and are not being passed on to the consumer in the form of higher prices.

“Nevertheless, the deflation in non-food continues to overshadow the discounting and promotional activity taking place in this channel as consumers become more cautious and look for ways to save on their household bills.”

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